Blackhawk Bancorp Announces Fourth Quarter and Annual 2012 Results
BELOIT, Wis., Feb. 8, 2013 /PRNewswire/ -- Blackhawk Bancorp, Inc. (OTCBB: BHWB) today reported net income of $781,000 for the quarter ended December 31, 2012, a 7% increase compared to the $731,000 earned in the fourth quarter of 2011. For the year ended December 31, 2012 Blackhawk reported net income of $2,912,000, a 20% increase compared to $2,426,000 earned in 2011. Strong growth in noninterest income, led by mortgage banking revenue, more than offset an increase in the provision for loan losses for the year.
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Earnings per share for the quarter increased 8% to $0.28 compared to $0.26 per share for the fourth quarter of 2011. Diluted earnings per share for the year increased 27% to $1.03 compared to the $.81 per share earned in 2011. Total assets increased slightly to $559.8 million as of December 31, 2012 compared with $559.0 million at year end 2011.
The following table summarizes key performance and asset quality measures for the quarter ended December 31, 2012 compared to the previous four quarters.
|
Key Performance and Asset Quality Measures |
4th Qtr 2012 |
3rd Qtr 2012 |
2nd Qtr 2012 |
1st Qtr 2012 |
4th Qtr 2011 |
| Diluted Earnings per share |
$0.28 |
$0.25 |
$0.27 |
$0.24 |
$0.26 |
| Return on average assets |
.55% |
.50% |
.53% |
.49% |
.52% |
| Return on common equity |
6.69% |
6.00% |
6.82% |
6.03% |
6.74% |
| Net interest margin |
3.75% |
3.72% |
3.80% |
3.75% |
3.79% |
| Efficiency ratio |
72.92% |
68.16% |
67.37% |
69.94% |
67.19% |
| Nonaccrual loans to total loans |
3.09% |
3.77% |
3.01% |
4.19% |
3.67% |
| Nonaccrual loans and OREO to total loans |
3.57% |
4.38% |
3.76% |
4.41% |
4.11% |
| Allowance for loan losses to total loans |
1.77% |
1.74% |
1.98% |
2.13% |
2.05% |
| Allowance for loan losses to nonaccrual loans |
57.11% |
46.1% |
65.8% |
50.8% |
55.9% |
| Subsidiary bank total risk-based capital |
13.51% |
13.62% |
13.58% |
13.83% |
13.90% |
Net Interest Income
Net interest income for the fourth quarter decreased 1% to $4.76 million compared to $4.84 million in the fourth quarter 2011. For the full year net interest income was down 1% to $19.0 million, compared to $19.2 million for 2011. The net interest margin for the quarter decreased to 3.75% compared to 3.79% for the fourth quarter of 2011. For the year ended December 31, 2012 the net interest margin decreased 6 basis points to 3.76% compared to 3.82% the year before. Growth in the commercial loan portfolio has helped to mitigate downward pressure on the net interest margin from the prolonged low rate environment.
Average earning assets for 2012 increased by $9.7 million compared to the year before. The earning asset growth includes an $18.6 million, or 6%, increase in average loans, which was offset by a reduction of $11.0 million in investment securities and short-term investments. Average total deposits for 2012 grew by $12.2 million, or 3%, to $487.9 million compared to $475.6 in 2011.
Non-Interest Income and Operating Expenses
Noninterest income for the fourth quarter totaled $2.7 million, a 25% increase compared to the $2.2 million generated in the fourth quarter of 2011. For the year, non-interest income increased 38% to $11.1 million compared to $8.1 million in 2011. The $3.0 million increase in non-interest income for the year reflects a $2.0 million increase in mortgage banking revenue and increases in substantially all other categories of non-interest income.
Operating expenses increased by $0.8 million, or 16%, to $5.6 million in the fourth quarter of 2012 compared to $4.8 million the prior year. For the year, operating expenses were up $1.8 million, or 9%, to $21.4 million compared to $19.5 million in 2011. The increase in expenses was primarily in salary and benefits and other variable expenses tied to increased mortgage banking and other fee generating activities.
Provision for Loan Losses and Credit Quality
The provision for loan losses in the fourth quarter decreased by 21% to $1.3 million compared to $1.6 million in fourth quarter 2011. For the year, Blackhawk recorded a provision for loan losses of $5.6 million, a 17% increase over the $4.8 million provision recorded in 2011. Loans charged off in 2012, net of recoveries, equaled $6.0 million compared to $4.0 million in 2011. The ratio of allowance for loan losses to total loans was 1.77% at December 31, 2012 compared to 2.05% at December 31, 2011.
The following table summarizes the activity in the allowance for loan losses for 2011 and 2010.
| Activity in Allowance for Loan Losses |
2012 |
2011 |
| Beginning allowance for loan losses |
$ 6,943,000 |
$ 6,142,000 |
| Provision for loan losses |
5,620,000 |
4,803,000 |
| Charge-offs |
(6,391,000) |
(4,407,000) |
| Recoveries |
348,000 |
405,000 |
| Ending allowance for loan losses |
$ 6,520,000 |
$ 6,943,000 |
|
Net charge-offs to average total loans |
1.71% |
1.20% |
Nonperforming assets equaled $13.2 million, or 3.57% of total loans, at December 31, 2012 compared to $14.1 million, or 4.11% of total loans December 31, 2011. As of December 31, 2012 the ratio of the allowance for loan losses to nonperforming loans equals 57%, compared to 56% at December 31, 2011.
Outlook
Blackhawk has created a strong credit culture and the processes to support it, but the potential for continuing economic weakness presents a heightened level of risk. For that reason the company expects to continue fortifying its balance sheet by conserving capital, strengthening the allowance for loan losses and maintaining ample liquidity to meet the demands of its customer base. The company will however continue to seek profitable growth opportunities in its Wisconsin and Illinois markets, without sacrificing profitability or credit quality. Blackhawk emphasizes the value of its personal attention and the service it provides that remain unmatched by larger competitors.
About Blackhawk Bancorp
Blackhawk Bancorp, Inc. is headquartered in Beloit, Wisconsin and is the parent company of Blackhawk Bank, which operates eight banking centers in south central Wisconsin and north central Illinois, along the I-90 corridor from Belvidere, Illinois to Beloit, Wisconsin. Blackhawk's locations serve individuals and small businesses, primarily with fewer than 200 employees. The company offers a variety of value-added consultative services to small businesses and their employees related to its banking products such as health savings accounts and investment management.
Forward-Looking Statements
When used in this communication, the words "believes," "expects," and similar expressions are intended to identify forward-looking statements. The company's actual results may differ materially from those described in the forward-looking statements. Factors which could cause such a variance to occur include, but are not limited to: heightened competition; adverse state and federal regulation; failure to obtain new or retain existing customers; ability to attract and retain key executives and personnel; changes in interest rates; unanticipated changes in industry trends; unanticipated changes in credit quality and risk factors, including general economic conditions; success in gaining regulatory approvals when required; changes in the Federal Reserve Board monetary policies; unexpected outcomes of new and existing litigation in which Blackhawk or its subsidiaries, officers, directors or employees is named defendants; technological changes; changes in accounting principles generally accepted in the United States; changes in assumptions or conditions affecting the application of "critical accounting policies"; and the inability of third party vendors to perform critical services for the company or its customers.
Further information is available on the Company's website at www.blackhawkbank.com.
| BLACKHAWK BANCORP, INC. AND SUBSIDIARIES |
|||
| CONSOLIDATED BALANCE SHEETS |
|||
| DECEMBER 31, 2012 AND DECEMBER 31, 2011 |
|||
| (UNAUDITED) |
|||
| December 31, |
December 31, |
||
| Assets |
2012 |
2011 |
|
| (Amounts in thousands, except |
|||
| share and per share data) |
|||
| Cash and due from banks |
$ 11,579 |
$ 13,056 |
|
| Federal funds sold and securities purchased under agreements to resell |
25,442 |
31,964 |
|
| Total cash and cash equivalents |
37,021 |
45,020 |
|
| Interest-bearing deposits in banks |
1,539 |
1,097 |
|
| Trading securities |
1,614 |
2,449 |
|
| Securities available-for-sale |
121,096 |
142,788 |
|
| Loans held for sale |
2,558 |
4,140 |
|
| Federal Home Loan Bank (FHLB) Stock, at cost |
2,266 |
4,085 |
|
| Loans, less allowance for loan losses of $6,520 and $6,943 |
|||
| at December 31, 2012 and December 31, 2011, respectively |
359,928 |
326,935 |
|
| Office buildings and equipment, net |
8,406 |
8,772 |
|
| Intangible assets, net |
8,274 |
8,102 |
|
| Cash surrender value of bank-owned life insurance |
9,017 |
8,720 |
|
| Other assets |
8,062 |
6,879 |
|
| Total assets |
$ 559,781 |
$ 558,987 |
|
| Liabilities and Stockholders' Equity |
|||
| Liabilities |
|||
| Deposits: |
|||
| Noninterest-bearing |
$ 84,311 |
$ 70,578 |
|
| Interest-bearing |
409,510 |
405,049 |
|
| Total deposits |
493,821 |
475,627 |
|
| Short-term borrowings |
- |
16,000 |
|
| Other borrowings (including $2,231 and $2,255 at fair value at |
|||
| December 31, 2012 and December 31, 2011, respectively) |
10,010 |
16,326 |
|
| Subordinated debentures (including $834 and $834 at fair value at |
|||
| December 31, 2012 and December 31, 2011, respectively) |
4,958 |
4,958 |
|
| Other liabilities |
3,156 |
2,040 |
|
| Total liabilities |
511,945 |
514,951 |
|
| Stockholders' equity |
|||
| Preferred stock, $0.01 par value, 1,000,000 shares authorized; |
|||
| 10,500 shares issued as of December 31, 2012 and |
|||
| December 31, 2011, respectively |
10,383 |
10,283 |
|
| Common stock, $0.01 par value, 10,000,000 shares authorized; |
|||
| 2,279,004 and 2,279,004 shares issued as of December 31, 2012 and |
|||
| December 31, 2011, respectively |
23 |
23 |
|
| Surplus |
9,619 |
9,477 |
|
| Retained earnings |
25,897 |
23,629 |
|
| Treasury stock, 83,252 and 85,252 shares at cost as of December 31, 2012 and |
|||
| December 31, 2011, respectively |
(909) |
(909) |
|
| Accumulated other comprehensive income (loss) |
2,823 |
1,533 |
|
| Total stockholders' equity |
47,836 |
44,036 |
|
| Total liabilities and stockholders' equity |
$ 559,781 |
$ 558,987 |
|
|
BLACKHAWK BANCORP, INC. AND SUBSIDIARIES |
||||
| CONSOLIDATED STATEMENTS OF INCOME |
||||
| (UNAUDITED) |
||||
| Three months ended December 31, |
||||
| 2012 |
2011 |
|||
| (Amounts in thousands, except |
||||
| share and per share data) |
||||
| Interest Income: |
||||
| Interest and fees on loans |
$ 4,964 |
$ 4,958 |
||
| Interest on trading securities |
15 |
16 |
||
| Interest and dividends on securities: |
||||
| Taxable |
424 |
822 |
||
| Tax-exempt |
291 |
249 |
||
| Interest on federal funds sold and securities purchased under agreements to resell |
52 |
89 |
||
| Interest on interest-bearing deposits in banks |
2 |
3 |
||
| Total interest and dividend income |
5,748 |
6,137 |
||
| Interest Expenses: |
||||
| Interest on deposits |
760 |
1,029 |
||
| Interest on short-term borrowings |
1 |
1 |
||
| Interest on long-term borrowings |
177 |
227 |
||
| Interest on subordinated debentures |
35 |
36 |
||
| Total interest expense |
973 |
1,293 |
||
| Net interest and dividend income |
4,775 |
4,844 |
||
| Provision for loan losses |
1,260 |
1,599 |
||
| Net interest and dividend income after provision for loan losses |
3,515 |
3,245 |
||
| Noninterest Income: |
||||
| Service charges on deposits accounts |
753 |
661 |
||
| Net gain on sale of loans |
1,436 |
1,155 |
||
| Net mortgage servicing income |
(126) |
(133) |
||
| Debit card interchange fees |
552 |
546 |
||
| Net gains (losses) on trading activities |
- |
(19) |
||
| Net gains (losses) on available-for-sale securities |
144 |
9 |
||
| Net other gains (losses) |
(163) |
(248) |
||
| Increase in cash value of bank-owned life insurance |
72 |
71 |
||
| Other |
80 |
152 |
||
| Total noninterest income |
2,748 |
2,194 |
||
| Noninterest Expenses: |
||||
| Salaries and employee benefits |
2,905 |
2,420 |
||
| Occupancy and equipment |
607 |
578 |
||
| Data processing |
630 |
618 |
||
| FDIC assessment |
185 |
180 |
||
| Advertising and marketing |
59 |
102 |
||
| Amortization of intangibles |
35 |
35 |
||
| Professional fees |
255 |
200 |
||
| Office Supplies |
97 |
96 |
||
| Telephone |
95 |
76 |
||
| Other |
725 |
527 |
||
| Total noninterest expenses |
5,593 |
4,832 |
||
| Income before income taxes |
670 |
607 |
||
| Income Taxes |
(111) |
(124) |
||
| Net income |
$ 781 |
$ 731 |
||
| Key Ratios |
||||
| Basic Earnings Per Common Share |
$ 0.28 |
$ 0.26 |
||
| Diluted Earnings Per Common Share |
0.28 |
0.26 |
||
| Net Interest Margin (FTE) |
3.75% |
3.79% |
||
| Efficiency Ratio (FTE) |
72.92% |
67.56% |
||
| Return on Assets |
0.55% |
0.52% |
||
| Return on Common Equity |
6.69% |
6.72% |
||
| BLACKHAWK BANCORP, INC. AND SUBSIDIARIES |
|||
| CONSOLIDATED STATEMENTS OF INCOME |
|||
| (UNAUDITED) |
|||
| Twelve months ended December 31, |
|||
| 2012 |
2011 |
||
| (Amounts in thousands, except |
|||
| share and per share data) |
|||
| Interest Income: |
|||
| Interest and fees on loans |
$ 19,464 |
$ 19,591 |
|
| Interest on trading securities |
66 |
86 |
|
| Interest and dividends on securities: |
|||
| Taxable |
2,533 |
3,859 |
|
| Tax-exempt |
1,159 |
979 |
|
| Interest on federal funds sold and securities purchased under agreements to resell |
259 |
300 |
|
| Interest on interest-bearing deposits in banks |
13 |
7 |
|
| Total interest and dividend income |
23,494 |
24,822 |
|
| Interest Expenses: |
|||
| Interest on deposits |
3,518 |
4,603 |
|
| Interest on short-term borrowings |
5 |
8 |
|
| Interest on long-term borrowings |
811 |
923 |
|
| Interest on subordinated debentures |
144 |
137 |
|
| Total interest expense |
4,478 |
5,671 |
|
| Net interest and dividend income |
19,016 |
19,151 |
|
| Provision for loan losses |
5,620 |
4,803 |
|
| Net interest and dividend income after provision for loan losses |
13,396 |
14,348 |
|
| Noninterest Income: |
|||
| Service charges on deposits accounts |
2,792 |
2,556 |
|
| Net gain on sale of loans |
5,009 |
2,733 |
|
| Net mortgage servicing income |
(369) |
(135) |
|
| Debit card interchange fees |
2,259 |
2,140 |
|
| Net gains (losses) on trading activities |
(49) |
(251) |
|
| Net gains (losses) on available-for-sale securities |
666 |
396 |
|
| Net other gains (losses) |
(279) |
(518) |
|
| Increase in cash value of bank-owned life insurance |
297 |
280 |
|
| Other |
790 |
862 |
|
| Total noninterest income |
11,116 |
8,063 |
|
| Noninterest Expenses: |
|||
| Salaries and employee benefits |
11,092 |
9,722 |
|
| Occupancy and equipment |
2,399 |
2,296 |
|
| Data processing |
2,536 |
2,413 |
|
| FDIC assessment |
740 |
825 |
|
| Advertising and marketing |
313 |
445 |
|
| Amortization of intangibles |
139 |
167 |
|
| Professional fees |
1,053 |
852 |
|
| Office Supplies |
382 |
377 |
|
| Telephone |
342 |
286 |
|
| Other |
2,357 |
2,168 |
|
| Total noninterest expenses |
21,353 |
19,551 |
|
| Income before income taxes |
3,159 |
2,860 |
|
| Income Taxes |
247 |
434 |
|
| Net income |
$ 2,912 |
$ 2,426 |
|
| Key Ratios |
|||
| Basic Earnings Per Common Share |
$ 1.03 |
$ 0.81 |
|
| Diluted Earnings Per Common Share |
1.03 |
0.81 |
|
| Net Interest Margin (FTE) |
3.76% |
3.82% |
|
| Efficiency Ratio (FTE) |
69.54% |
71.06% |
|
| Return on Assets |
0.52% |
0.44% |
|
| Return on Common Equity |
6.37% |
5.51% |
|
| BLACKHAWK BANCORP, INC. AND SUBSIDIARIES |
|||||||
| AVERAGE BALANCE SHEET WITH RESULTANT INTEREST AND RATES |
|||||||
| Average Balance Sheet with Resultant Interest and Rates |
|||||||
| (Amounts in thousands) |
|||||||
| (yields on a tax-equivalent basis) |
Three months ended December 31, 2012 |
Three months ended December 31, 2011 |
|||||
| Average |
Average |
Average |
Average |
||||
| Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
||
| Interest Earning Assets: |
|||||||
| Interest-bearing deposits in banks |
$ 4,844 |
$ 2 |
0.20% |
$ 6,642 |
$ 3 |
0.18% |
|
| Federal funds sold & securities |
|||||||
| purchased under agreements to |
|||||||
| resell |
17,777 |
52 |
1.17% |
27,499 |
89 |
1.28% |
|
| Investment securities: |
|||||||
| Taxable investment securities |
102,173 |
439 |
1.71% |
117,567 |
838 |
2.83% |
|
| Tax-exempt investment securities |
33,519 |
291 |
5.20% |
28,015 |
249 |
5.15% |
|
| Total Investment securities |
135,692 |
730 |
2.57% |
145,582 |
1,087 |
3.28% |
|
| Loans |
363,234 |
4,964 |
5.44% |
339,189 |
4,958 |
5.80% |
|
| Total Earning Assets |
$ 521,547 |
$ 5,748 |
4.50% |
$ 518,912 |
$ 6,137 |
4.78% |
|
| Allowance for loan losses |
(6,312) |
(6,591) |
|||||
| Cash and due from banks |
12,687 |
10,657 |
|||||
| Other assets |
34,681 |
34,503 |
|||||
| Total Assets |
$ 562,603 |
$ 557,481 |
|||||
| Interest Bearing Liabilities: |
|||||||
| Interest bearing checking accounts |
$ 152,076 |
$ 236 |
0.62% |
$ 138,972 |
$ 403 |
1.15% |
|
| Savings and money market deposits |
143,406 |
69 |
0.19% |
139,942 |
125 |
0.36% |
|
| Time deposits |
107,092 |
455 |
1.69% |
119,223 |
501 |
1.66% |
|
| Total interest bearing deposits |
402,574 |
760 |
0.75% |
398,137 |
1,029 |
1.02% |
|
| Short-term borrowings |
326 |
1 |
0.82% |
1,135 |
1 |
0.34% |
|
| Subordinated debentures |
4,958 |
35 |
2.80% |
4,958 |
36 |
2.90% |
|
| Long-term borrowings |
15,360 |
177 |
4.60% |
30,458 |
227 |
2.96% |
|
| Total Interest-Bearing Liabilities |
$ 423,218 |
$ 973 |
0.91% |
$ 434,688 |
$ 1,293 |
1.18% |
|
| Interest Rate Spread |
3.59% |
3.60% |
|||||
| Noninterest checking accounts |
84,862 |
71,474 |
|||||
| Other liabilities |
6,175 |
6,927 |
|||||
| Total liabilities |
514,255 |
513,089 |
|||||
| Preferred Stock |
10,367 |
10,273 |
|||||
| Common Stockholders' equity |
37,981 |
34,118 |
|||||
| Total Stockholders' equity |
48,348 |
44,391 |
|||||
| Total Liabilities and |
|||||||
| Stockholders' Equity |
$ 562,603 |
$ 557,480 |
|||||
| Net Interest Income/Margin |
$ 4,775 |
3.75% |
$ 4,844 |
3.79% |
|||
| BLACKHAWK BANCORP, INC. AND SUBSIDIARIES |
|||||||
| AVERAGE BALANCE SHEET WITH RESULTANT INTEREST AND RATES |
|||||||
| Average Balance Sheet with Resultant Interest and Rates |
|||||||
| (Amounts in thousands) |
|||||||
| (Yields on a tax-equivalent basis) |
Twelve months ended December 31, 2012 |
Twelve months ended December 31, 2011 |
|||||
| Average |
Average |
Average |
Average |
||||
| Balance |
Interest |
Rate |
Balance |
Interest |
Rate |
||
| Interest Earning Assets: |
|||||||
| Interest-bearing deposits in banks |
$ 4,910 |
$ 13 |
0.27% |
$ 2,771 |
$ 7 |
0.33% |
|
| Federal funds sold & securities |
|||||||
| purchased under agreements to |
|||||||
| resell |
21,834 |
259 |
1.19% |
24,787 |
300 |
1.18% |
|
| Investment securities: |
|||||||
| Taxable investment securities |
108,138 |
2,599 |
2.40% |
124,442 |
3,945 |
3.28% |
|
| Tax-exempt investment securities |
33,154 |
1,159 |
5.22% |
24,864 |
979 |
5.78% |
|
| Total Investment securities |
141,292 |
3,758 |
3.06% |
149,306 |
4,924 |
3.67% |
|
| Loans |
353,372 |
19,464 |
5.51% |
334,807 |
19,591 |
5.87% |
|
| Total Earning Assets |
$ 521,408 |
$ 23,494 |
4.62% |
$ 511,671 |
$ 24,822 |
4.98% |
|
| Allowance for loan losses |
(6,783) |
(6,296) |
|||||
| Cash and due from banks |
12,419 |
10,641 |
|||||
| Other assets |
34,079 |
35,110 |
|||||
| Total Assets |
$ 561,123 |
$ 551,126 |
|||||
| Interest Bearing Liabilities: |
|||||||
| Interest bearing checking accounts |
$ 153,891 |
$ 1,285 |
0.83% |
$ 134,354 |
$ 1,671 |
1.28% |
|
| Savings and money market deposits |
144,699 |
372 |
0.26% |
144,115 |
516 |
0.36% |
|
| Time deposits |
109,401 |
1,861 |
1.70% |
128,079 |
2,416 |
1.95% |
|
| Total interest bearing deposits |
407,991 |
3,518 |
0.86% |
406,548 |
4,603 |
1.17% |
|
| Short-term borrowings |
872 |
5 |
0.56% |
1,912 |
8 |
0.45% |
|
| Subordinated debentures |
4,958 |
144 |
2.90% |
4,958 |
137 |
2.72% |
|
| Long-term borrowings |
17,414 |
811 |
4.66% |
22,109 |
923 |
4.82% |
|
| Total Interest-Bearing Liabilities |
$ 431,235 |
$ 4,478 |
1.04% |
$ 435,527 |
$ 5,671 |
1.35% |
|
| Interest Rate Spread |
3.58% |
3.63% |
|||||
| Noninterest checking accounts |
79,886 |
69,100 |
|||||
| Other liabilities |
3,496 |
3,452 |
|||||
| Total liabilities |
514,617 |
508,079 |
|||||
| Preferred Stock |
10,234 |
10,234 |
|||||
| Common Stockholders' equity |
36,272 |
32,813 |
|||||
| Total Stockholders' equity |
46,506 |
43,047 |
|||||
| Total Liabilities and |
|||||||
| Stockholders' Equity |
$ 561,123 |
$ 551,126 |
|||||
| Net Interest Income/Margin |
$ 19,016 |
3.76% |
$ 19,151 |
3.82% |
|||
SOURCE Blackhawk Bancorp, Inc.
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